Project On Merger and Acquisition

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Project on merger and acquisition
Bachelors of Business Administration in Finance & Investment Analysis (University of

Delhi)
Studocu is not sponsored or endorsed by any college or university

Downloaded by Arif Mulla (arifmulla376@gmail.com)
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PROJECT REPORT
(Submitted for the Degree of B.Com. Honours in
Accounting & Finance under the University of
Calcutta)
TITLE OF THE PROJECT:

“MERGER & ACQUISITION”
SUBMITTED BY
Name of the Candidate : RAVI KANT BHALOTIA
Registration Number: 988-303-4569
Name of the College: THE BHAWANIPUIR EDUCATION
SOCIETY COLLEGE
College Roll Number: 123
CU exam Roll Number: 8820-69-6761
SUPERVISED BY
Name of the Supervisor: DR. ALKA BHALOTIA
Name of the College: THE BHAWANIPUIR EDUCATION
SOCIETY COLLEGE
MONTH & YEAR OF SUBMISSION:

Date: June, 2021

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Annexure-IA
SUPERVISOR'S CERTIFICATE
This is to certify that MR. RAVI KANT BHALOTIA a student of B.Com. Honours in
Accounting & Finance of THE BHAWANIPUR EDUCATION SOCIETY COLLEGE,
under the University of Calcutta has worked under my supervision and guidance for his/her Project
Work and prepared a Project Report with the title “MERGER & ACQUISITION” which he/she is
submitting, is his/her genuine and original work to the best of my knowledge.
Place: Kolkata Signature:

Date: 31/05/2021 Name: DR. ALKA BHALOTIA
Designation: PROFESSOR
Name of the College: The bhawanipur education society college

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Annexure-IB
STUDENT'S DECLARATION
I hereby declare that the Project Work with the title “MERGER & ACQUISITION”
submitted by me for the partial fulfilment of the degree of B.Com. Honours in
Accounting & Finance under the University of Calcutta is my original work and has not
been submitted earlier to any other University /Institution for the fulfilment of the
requirement for any course of study.
I also declare that no chapter of this manuscript in whole or in part has been incorporated in
this report from any earlier work done by others or by me. However, extracts of any
literature which has been used for this report has been duly acknowledged providing details
of such literature in the references.
Place: Kolkata Signature:

Date: 31/05/2021 Name: RAVI KANT BHALOTIA
Registration Number: 988-303-4569
College Roll Number: 123

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ACKNOWLEDGEMENT
First of all thanks to God, for giving me and my friends the strength and will to complete
this task just in time. Even though we faced a lot of difficulties while trying to complete this
task, the group still managed to complete it and we are glad about it.
A special thanks to Mr Abhishek Pandey, for being such a good guidance to us while we
were doing this task. He had given us an appropriate example and knowledge in order to
make us understand more about this topic. He spends his time to explain the execution of
this idea in all the way.
I also appreciate CA Shruti Chamaria, for her support to me to do this project in all the way
and made it possible. We also want to thank other groups who were willing to share their
information about this topic. They gave us a lot of new ideas about the task.
Also a great thanks to my family and friends who tried their best to give their support either
by giving me a lot of encouragement to keep up with this task or by supporting us
financially and pay all the cost required to complete this task.

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CONTENTS
PAGE
S. NO. TITLE NO.
1. COVER PAGE 1
2. SUPERVISOR’S CERTIFICATE 2
3. STUDENT’S DECLARATION 3
4. ACNOWLEDGEMENT 4
5. CHAPTER 1: INTRODUCTION
TO MERGER & ACQUISITION
1.1: Introduction 07 – 07
1.2: objectives 08 – 11
1.3: Benefits 12 – 13
1.4: Limitiation 14 – 14
1.5: Procedure 15 – 16
1.6: Valuation 17 – 17
1.7: Participants 18 – 18
1.8: Factors responsible for success 19 – 20
1.9: Factors responsible for failure 21 – 21
1.10: Research Methodology 22 – 22
6. CHAPTER 2: STUDY OF MAJOR MERGER &

ACQUISITION
2.1: Tata motors & ford motors: 24 – 25
2.2: Tech mahindra & mahindra satyam: 26 – 28
2.3: Vodafone & Idea 29 – 30
7. CHAPTER 3: DATA FINDING & ANALYSIS 31 - 37
4. CHAPTER 4: CONCLUSION 38 - 39
5. CHAPTER 5: BIBLIOGRAPHY 40 - 41
6. CHAPTER 6:QUESTIONNAIRE 42 - 44

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CHAPTER 1:
INTRODUCTION
TO MERGERS &
ACQUISITION

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1.1: INTRODUCTION TO MERGERS & ACQUISITIONS
In a general sense, mergers and acquisitions are very similar corporate actions - they
combine two previously separate firms into a single legal entity. Significant operational
advantages can be obtained when two firms are combined and, in fact, the goal of most
mergers and acquisitions is to improve company performance and shareholder value over
the long-term.
A merger involves the mutual decision of two companies to combine and become one
entity; it can be seen as a decision made by two "equals". The combined business,
through structural and operational advantages secured by the merger, can cut costs and
increase profits, boosting shareholder values for both groups of shareholders. A typical
merger, in other words, involves two relatively equal companies, which combine to
become one legal entity with the goal of producing a company that is worth more than the
sum of its parts. In a merger of two corporations, the shareholders usually have their
shares in the old company exchanged for an equal number of shares in the merged entity.
A takeover, or acquisition, on the other hand, is characterized as the purchase of a smaller

company by a much larger one. This combination of "unequal" can produce the same
benefits as a merger, but it does not necessarily have to be a mutual decision. A larger
company can initiate a hostile takeover of a smaller firm, which essentially amounts
to buying the company in the face of resistance from the smaller company's management.
Unlike in a merger, in an acquisition, the acquiring firm usually offers a cash price per
share to the target firm's shareholders or the acquiring firm's share's to the shareholders of
the target firm according to a specified conversion ratio. Either way, the purchasing
company essentially finances the purchase of the target company, buying it outright for
its shareholders.
In this context, it would be essential for us to understand what corporate restructuring and
mergers and acquisitions are all about.

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1.2: OBJECTIVES BEHIND MERGERS

& ACQUISITIONS
There are many reasons or factors that motivate companies to go for mergers and
acquisitions such as growth, synergy, diversification etc.
1. Growth: One of the most common reason for mergers is growth. There are two
broadways a firm can grow. The first is through internal growth. This can be slow and
ineffective if a firm is seeking to take advantage of a window of opportunity in which
it has a short-term advantage over competitors. The faster alternative is to merge and
acquire the necessary resources to achieve competitive goals.
2. Synergy: Another commonly cited reason for mergers is the pursuit of synergistic
benefits. The most commonly used word in Mergers & Acquisitions is synergy,
which is the idea of combining business activities, for increasing performance and
reducing the costs. Essentially, a business will attempt to merge with another business
that has complementary strengths and weaknesses. This is the new financial math that
shows that 1 + 1 = 3. That is, as the equation shows, the combination of two firms will yield
a more valuable entity than the value of the sum of the two firms if they were operating
independently.
Value (A + B) > Value (A) + Value (B)
3. Diversification : Other reasons for mergers and acquisitions include diversification.

A company that merges to diversify may acquire another company engaged in
unrelated industry in order to reduce the impact of a particular industry's
performance on its profitability. The track record of diversifying mergers is generally
poor with a few notable exceptions. A few firms, such as General Electric, seem to be
able to grow and enhance shareholders wealth while diversifying. However, this is the
exception rather than a norm. Diversification may be successful, but it needs more
skill and infrastructure than some firms have.

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4. Economies of scale: Yes, size matters. Whether it's purchasing stationery or a new
corporate it system, a bigger company placing the orders can save more on costs.
Mergers also translate into improved purchasing power to buy equipment or office
supplies - when placing larger orders, companies have a greater ability to negotiate
prices with their suppliers. This refers to the fact that the combined company can
often reduce duplicate departments or operations, lowering the costs of the company
relative to theoretically the same revenue stream, thus increasing profit.
5. Increase Market Share & Revenue: This reason assumes that the company will be
absorbing a major competitor and increasing its power (by capturing increased market
share) to set prices. Companies buy companies to reach new markets and grow
revenues and earnings. A merge may expand two companies' marketing and
distribution, giving them new sales opportunities. A merger can also improve a
company's standing in the investment community: bigger firms often have an easier
time raising capital than smaller ones.
Example-Premier and Apollo Tyres,
6. Increase Supply-Chain Pricing Power: By buying out one of its suppliers or one of
the distributors, a business can eliminate a level of costs. If a company buys out one
of its suppliers, it is able to save on the margins that the supplier was
previously adding to its costs; this is known as a vertical merger. If a company buys
out a distributor; it may be able to sale its products at a lower cost.
7. Eliminate Competition: Many mergers and acquisitions deals allow the acquirer to
eliminate future competition and gain a larger market share in its product's
market. The downside of this is that a large premium is usually required to convince
the target company's shareholders to accept the offer. It is not uncommon for the
acquiring company's shareholders to sell their shares and push the price lower in
response to the company paying too much for the target company.

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8. Acquiring new technology: To stay competitive, companies need to stay on top of

technological developments and their business applications. By buying a smaller
company with unique technologies, a large company can maintain or develop a
competitive edge and vice versa.
9. Procurement of production facilities: Procurement of production facilities may be

the reason for acquiring company to go for mergers and acquisition. It is a kind of
backward integration. Acquiring Firms will take the decision of merging with another
firm who supplies raw material to acquiring firm in order to safeguard the sources of
supplies of raw material or intermediary product. It will help acquiring firm to bring
economies in purchasing of raw material. It will also help to cut down the
transportation cost.
Example- Videocon takes over Thomson picture tube in China to procure supply of
picture tube required for producing television sets.
10. Market expansion strategy: Many firms go for mergers and acquisitions as a part
of market expansion strategy. Mergers and acquisitions will help the company to
eliminate competition and to protect existing market. It will also help the firm to
obtain new market for promoting their existing or obsolete products.
Example, Lenovo takes over IBM in India to increase market for Lenovo products
like desktops, laptops in India.
11. Own development plans: The purpose of mergers & acquisition is backed by the
acquiring company's own developmental plans. A company thinks in terms of
acquiring the other company only when it has arrived at its own development plan to expand
its operation having examined its own internal strength where it might not have any problem
of taxation, accounting, valuation, etc. but might feel resource constraints with limitations of
funds and lack of skill managerial personnel. It has to aim at suitable combination where it
could have opportunities to supplement its funds by issuance of securities; secure additional
financial facilities eliminate competition and strengthen its market position.
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12. Corporate friendliness: Although it is rare but it is true that business houses exhibit
degrees of cooperative spirit despite competitiveness in providing rescues to each
other from hostile takeovers and cultivate situations of collaborations sharing
goodwill of each other to achieve performance heights through business
combinations. The combining corporate aims at circular combinations by pursuing
this objective.
13. Financial synergy: Financial synergy may be the reason for mergers and
acquisitions. Following are the financial synergy available in case of mergers and
acquisitions;
I. Better credit worthiness- This helps companies to purchase good on credit,
obtain bank loan and raise capital in the market easily.
II. Reduces cost of capital- The investors consider big firms as safe and hence they
expect lower rate of return for the capital supplied by them. So the cost of capital
reduces after merger.
III. Increase debt capacity- After the merger the earnings and cash flows become
more stable than before. This increase the capacity of the firm to borrow more
funds.
IV. Rising of capital- After the merger due to increase in the size of the company,
better credit worthiness and reputation the company can easily raise the capital at
any time.
14. General gains:

I. To improve its own image and attract superior managerial talents to manage its
affairs.
II. To offer better satisfaction to consumers or users of the product.
15. Taxes: A profitable company can buy a loss maker to use the target's loss as their
advantage by reducing their tax liability. In the United States and many other
countries, rules are in place to limit the ability of profitable companies to "shop" for
loss making companies, limiting the tax motive of an acquiring company.
► Ahmadabad Cotton Mills Merged with Arvind Mills ( Rs =3.34 crores)
► Sidhaper Mills merged with Reliance Industries Ltd.(Rs. 3.34 crores)
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1.3: BENEFITS/NEEDS OF
MERGERS & ACQUISITIONS
BENEFITS
Mergers and acquisitions is the permanent combination of the business which vest
management in complete control of the business of merged firm. Shareholders in the
selling company gain from the mergers and acquisitions as the premium offered to induce
acceptance of the merger or acquisitions. It offers much more price than the book value
of shares. Shareholders in the buying company gain premium in the long run with the
growth of the company.
Mergers and acquisitions are caused with the support of shareholders, managers and
promoters of the combing companies. The advantages, which motivate the
shareholders and managers to give their support to these combinations and the
resulting consequences they have to bear, are briefly noted below.
• From shareholders point of view: - Shareholders are the owners of the company so
they must get be benefited from the mergers and acquisitions. Mergers and
acquisitions can affect fortune of shareholders. Shareholders expect that investment
made by them in the combining companies should enhance when firms are merging.
The sale of shares from one company's shareholders to another and holding
investment in shares should give rise to greater values. Following are the advantages
that would be generally available in each merger and acquisition from the point of
view of shareholders;
1. Face value of the share is increased.
2. Shareholders will get more returns on the investments made by them in the
combining companies.
3. Sale of shares from one company's shareholder to another is possible.
4. Shareholders get better investment opportunities in mergers and acquisitions.
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• From managers point of view: - Managers are concerned with improving operations
of the company, managing the affairs of the company effectively for all round gains
and growth of the company which will provide them better deals in raising their
status, perks and fringe benefits. Mergers where all these things are the guaranteed
outcome get support from the managers.
• From Promoters point of view: -
1. Mergers offer company's promoters advantages of increase in the size of their

company, financial structure and financial strength.
2. Mergers can convert closely held and private limited company into public
limited company without contributing much wealth and losing control of
promoters over the company.
• From Consumers point of view: - Consumers are the king of the market so they
must get some benefits from mergers and acquisitions. Benefits in favour of the
consumer will depend upon the fact whether or not mergers increase or decrease
competitive economic and productive activity which directly affects the degree of
welfare of the consumers through changes in the price level, quality of the products
and after sales service etc.
Following are the benefits that consumers may derive from mergers and
acquisitions transactions;
1. Low price & better quality goods: - The economic gains realized from
mergers and acquisitions are passed on to consumers in the form of low priced
and better quality goods.
2. Improve standard of living of the consumers: - Low priced and better
quality products directly improves standard of living of the consumers.
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1.4: LIMITATIONS OF MERGERS &

ACQUISITIONS
DRAWBACKS
Merger or acquisition of two companies in the same field or in diverse field may involve
reduction in the number of competing firms in an industry and tend to dilute competition
in the market. They generally contribute directly to the concentration of economic power
and are likely to lead the merger entities to a dominant position of market power. It may
result in lesser substitutes in the market, which would affect consumer's welfare. Yet
another disadvantage may surface, if a large undertaking after merger because of
resulting dominance becomes complacent and suffers from deterioration over the years in
its performance. Following are some disadvantages of mergers and acquisitions;
• Creates monopoly- when two firms merged together they get dominating
position in the market which may lead to create monopoly in the market.
• Leads to unemployment-Raiders shouldn't have the right to buy up firms they
have no idea how to run - the employees who have spent their lives building up
the firm should be making the decisions.
• Raiders become filthy rich without producing anything, at the expense of
hardworking people who do produce something.
• M&A damages the morale and productivity of firms.
• Corporate debt levels have risen to dangerous levels.
• Managers pressured to forego long-term investment in favour of short-term profit.
• Shareholders may be payed lesser dividend if the firm is not making profits. There
may be a possibility that shareholders would be paid less returns on investment if
the company is not earning enough profit.
• Corporate raiders use their control to strip assets from the target, make a quick
profit, destroying the company in the process, throwing people out of work.
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1.5: PROCEDURE OF MERGER

1. Search for merger partner- The first step in mergers is to search for merger partner.
The top management may use their own contact in the same line of economic activity
or in the other diversified field which could be identified as a better merger partners.
Such identification should be based on the detail information of the merger partners
collected from public and private sources.
2. Agreement between the two companies- The beginning of actual merger procedure
starts with agreement between the merging companies, but mere agreement does not
provide legal cover to the transaction unless it is sanctioned by the Court under
section 391 of Companies Act 1956.
3. Scheme of merger - The scheme of merger should be prepared by the companies

which have taken decision of merging. There is no specific form prescribed for
scheme of merger but scheme should contain following information;
• Particulars about the merging companies.
• Main terms of transfer of assets and liabilities from transferor to transferee.
• Conditions of conducting business.
• Particulars about share capital of merging companies specifying authorized

capital issued capital and paid up capital.
• Description of proposed profit sharing ratio and any condition attached to it.
• Conditions about payment of dividend.
• Status of employees of the merging companies and also status of provident

fund, gratuity fund or any funds created for the benefits of existing employees.
• Treatment of debit balance of merging companies.
• Miscellaneous provisions covering income tax dues, contingencies and other

accounting entries.
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4. Approval of Board Of Directors for the scheme- The scheme for merger must be
approved by the respective Board Of Directors of transferor and transferee
companies.
5. Approval of scheme by financial institutions- The Board of Directors should in fact

approve the scheme after it has been approved by the financial institutes, debenture
holders, banks which have granted loans to the companies. Approval of Reserve Bank
of India is also needed.
6. Application to the Court- The next step is to make an application under section
39(1) of Indian Companies Act 1956 to the High Court for getting permission for
merging between companies.
7. Approval of scheme by the Court- On the receipt of the application for merger the
Court will decide whether to approve the scheme of merger or not. Once the Court
has approved the application then firms can merged.
8. Transfer of assets and liabilities- The High Court has the power to give order for
transfer of any property from Transferor Company to Transferee Company. By the
virtue of such order assets and liabilities of the Transferor Company shall
automatically stand transferred to Transferee Company.
9. Allotment of shares to shareholders of transferor company- By the virtue of

sanctioned scheme of merger, the shareholders of Transferor Company are entitled to
get shares in Transferee Company in the exchange of ratio provided under the said
scheme.
10. Intimation to stock exchanges- After merger is effected; the company which takes
over assets and liabilities of the Transferor Company should apply to the Stock
Exchanges where its securities are listed, for listing the new shares allotted to the
shareholders of the company.
11. Public announcement- Public announcement shall be made at least in one national
English daily one Hindi daily and one regional language daily newspaper of that place
where the shares of that company are listed and traded. Public announcement should
be made within four days from finalization of negotiations or entering into any
agreement of merger. Public announcement should contain following information;
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1.6: MERGERS AND ACQUISITIONS

VALUATION METHODS
Following are some methods that are employed by the merging firms;
1. Comparative Ratios - The following are two examples of the many comparative
metrics on which acquiring companies may base their offers:
• Price-Earnings Ratio (P/E Ratio) - With the use of this ratio, an acquiring
company makes an offer that is a multiple of the earnings of the target company.
Looking at the P/E for all the stocks within the same industry group will give the
acquiring company good guidance for what the target's P/E multiple should be.
• Enterprise-Value-to-Sales Ratio (EV/Sales) - With this ratio, the acquiring
company makes an offer as a multiple of the revenues, again, while being aware
of the price-to-sales ratio of other companies in the industry.
2. Replacement Cost - In a few cases, acquisitions are based on the cost of replacing
the target company. For simplicity's sake, suppose the value of a company is simply
the sum of all its equipment and staffing costs. The acquiring company can literally
order the target to sell at that price, or it will create a competitor for the same cost.
Naturally, it takes a long time to assemble good management, acquire property and
get the right equipment. This method of establishing a price certainly wouldn't make
much sense in a service industry where the key assets - people and ideas - are hard to
value and develop.
3. Discounted Cash Flow (DCF) - A key valuation tool in mergers and acquisitions,
discounted cash flow analysis determines a company's current value according to its
estimated future cash flows. Forecasted free cash flows (net income +
depreciation/amortization - capital expenditures - change in working capital) are
discounted to a present value using the company's weighted average costs of
capital (WACC). Admittedly, DCF is tricky to get right, but few tools can rival this
valuation method.
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1.7: PARTICIPANTS TO MERGERS

AND ACQUISITIONS
Mergers and Acquisitions process requires highly skilled and qualified group of advisers.
Each advisor specializes in a specific aspect of the merger and acquisition process. The
role played by such advisers or professional experts are as follows;
1. Investment bankers: Investment banking is one of the most important department in

the process of mergers and acquisitions. It is fee based adviser department which
works with the company that wish to acquire other company or with industries that
wish to purchase a smaller industry. The main role of investment banks is to provide
finance for mergers and acquisitions transactions.
2. Lawyers: The legal framework surrounding a typical transaction has become so
complicated that no one individual can have sufficient expertise to address all the
issues. In large and complicated transactions, legal teams consists of more than one
dozen lawyers each of them represents specialized aspects of law. Lawyers are
expected to perform all legal proceedings.
3. Accountants: Services provided by accountants include advice on the optimal tax
structure, financial structuring and performing financial due diligence. A transaction
can be structured in many different ways, with each having different tax implications
for the parties involved. Tax accountants are vital in determining the appropriate tax
structure. Accountants also perform the role of auditors by reviewing the transferor
company's financial statements and operations through a series of interviews with
senior and middle level managers.
4. Valuation experts: They may be appointed either by the bidder or the Transferor
Company to determine the value of the transferor company. They build models that
incorporate various assumptions such as costs or revenue growth rate.
5. Institutional investors: They include public and private pension funds, insurance
companies, banks, mutual funds. Collection of institutions can influence firm's
action. They invest their money in the company.
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1.8: FACTORS RESPONSIBLE FOR SUCCESSFUL

MERGERS AND ACQUISITIONS
I. Strategy- Strategy is the basis for any merger and acquisition. Company should
be able to express in one sentence the motive behind merger and acquisition. If
the transferor company is not able to express the motive for doing a deal for
merger then the deal should not be done. There are many strategic reasons to buy
a company some of them are listed as follows;
• Acquire Innovative technical skills.
• Obtain new markets and customer.
• Enhance product line.
II. Motive- Buying company i.e. transferor company does not know reasons why
another company is being sold. It should ask reasons for selling the company.
Transferor Company should also try to know what selling company knows about
the business that they are not telling potential buyers. After knowing all reasons
for selling a company buying company would be in a position to decide whether
to go for a deal or not. If they are going for deal then buying company should
decide appropriate price for the deal. Buying company should also examine its
own motive for wanting to acquire the company, whether it is good asset for the
company that would enhance the market of buying company.
III. Price- A low price does not always equate to a good deal, but higher the price; it
is fewer cushions for unexpected problems. Buying company is often forced to
pay more price than they want to pay for the deal. In a competitive situation the
buying company needs to decide how much it is willing to pay and not exceed
that level, even if it means losing the company. However, in any merger and
acquisition there is a pricing range, based on different assumptions of the future
performance of the merger and acquisition. The buying company has to decide the
price to offer for the deal, or how risk will be divided between shareholders of
merging company.
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IV. Post Merger Management- For a merger to succeed much work a remains after
the deal has been signed. The strategy and business model of the old firms may no
longer be appropriate when a new firm is formed. Each firm is unique and
presents it's own set of problems and solutions. It takes a systematic effort to
combine two or more companies after they have come under a single ownership.
V. DUE DILIGENCE- Due diligence means, "A large part of what makes a deal
successful after completing it, is what is being done before completing it". Before
the closing of the deal, the buyer should engage in a thorough due diligence
review of the sellers business. The purpose of the review is to detect any financial
and the business risk that the buyer might inherit from the seller. The due
diligence team can identify ways in which assets, process and other resources can
be combined in order to realize cost saving and other expected synergies. The
planning team can also try to understand the necessary sequencing of events and
resulting pace at which the expected synergies may be realized.
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1.9: FACTORS RESPONSIBLE FOR

FAILURE OF MERGERS AND
ACQUISITIONS
As there are many factors responsible for success of mergers similarly there are many
factors responsible for failure of the merger. The main factor is buying wrong company at
wrong time, at wrong place and by paying wrong price. If the process through which
merger is executed is faulty then it will affect merger adversely. Historical trends show
that roughly two thirds of big mergers will disappoint on their own terms, which means
they will lose value on the stock market. Some of reasons for failure of mergers and
acquisitions are listed below;
I. Payment of high price- The merger fails when the maximum price is paid to
buy another company. In such situation shareholders of Transferee Company
will receive more cash but the shareholders of Transferor Company will pay
more cash. As a result of this deal for merger will fail.
II. Culture clash- Lack of proper communication, differing expectations and
conflicting management styles due to differences in corporate culture contribute
to failure in implementing plan and therefore, failure of mergers and
acquisitions.
III. Overstated synergies: - An acquisition can create opportunities of synergy by
increasing revenues, reducing costs, reducing net working capital and improving
the investment intensity. Over estimation of such synergies may lead to a failure
of this merger. Inability to prepare plans leads to failure of mergers and
acquisitions.
IV. Failure to integrate operations- Once firms are merged management must be
prepared to adapt plans in favour of changed circumstances. Inability to prepare
plans leads to failure of mergers and acquisitions.
V. Inadequate due diligence- The process of the due diligence helps in detecting
any financial and business risks that the buyer might inherit from the seller.
Inadequate due diligence results in the failure of the mergers and acquisitions.
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1.10: RESEARCH METHODOLOGY

The project is divided into two parts. The first part of the project deals with Mergers and
Acquisitions as a concept on a whole. I have researched about the basic knowhow of
Mergers and Acquisitions, the history of the industry and the present state by using
secondary data. The first part of the project is descriptive study giving an overview of the
Mergers and Acquisitions. The first part of the project is collected through secondary data
obtained from the internet, newspaper, magazines whereas the second part of the project
relating to the Trends in Mergers and Acquisitions and the analysis of the M&A Market
in India and the senior executives perception of Mergers and Acquisitions is covered
using primary data.
Both primary and secondary data are required in this study.Primary data is the first hand
information collected directly from respondents. The tool used here is questionnaire.
Primary Data is collected through surveys conducted among existing executives and
employees working in todays Global Work Environment,including some top level
executives from some of the big MNC's functioning in Gurgaon.
The survey process involved two phases: First phase included identification and selection
of the target audience to be studied and to determine the parameters on which
respondents will justify their preferences. A questionnaire was designed to collect the
needed information from the respondents. The Second Phase involves collection of the
primary data by making the respondents fill up questionnaires.
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CHAPTER 2:
STUDY OF MAJOR M&A's
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2.1: MERGER OF TATA MOTORS &

FORD MOTORS:
About Tata Motors
Tata Motors is India’s largest automobile company, with revenues of US$ 8.8 billion in 2007-08.
With over 4 million Tata vehicles plying in India, it is the leader in commercial vehicles and
among the top three in passenger vehicles. It is also the world’s fourth largest truck manufacturer
and the second largest bus manufacturer. Tata cars, buses and trucks are being marketed in several
countries in Europe, Africa, the Middle East, South Asia, South East Asia and South America.
Through subsidiaries and associate companies, Tata Motors has operations in South Korea,
Thailand and Spain. It also has a strategic alliance with Fiat.
About FORD
Ford Motor Company is a multinational automobile manufacturer with its roots in America. It
manufactures and sells automobiles, trucks, buses and tractors across the world. ... Currently,
Lincoln and Troller (Brazilian SUV manufacturer) are the active Ford marques. Ford has its
headquarters in Dearborn, Michigan, in U.S.A.
MERGER OF TATA MOTORS & FORD:

Tata Motors today acquired the Jaguar Land Rover businesses from Ford Motor Company for a net
consideration of US $2.3 billion, as announced on March 26, in an all-cash transaction. Ford has
contributed about US $600 million to the Jaguar Land Rover pension plans.
Mr. Ratan N. Tata, Chairman of Tata Sons and Tata Motors, was present at the handing over
ceremony at the head quarters of Jaguar Land Rover at Gaydon in the UK along with Mr. Don
Leclair, the Executive Vice President and Chief Financial Officer of Ford Motor Company, and
Mr. Lewis Booth, Executive Vice President of Ford Motor Company, who has responsibility for
Ford of Europe, Volvo and Jaguar Land Rover.
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Commenting on the occasion, Mr. Tata said, “This is a momentous time for all of us at Tata
Motors. Jaguar and Land Rover are two iconic British brands with worldwide growth prospects.
We are looking forward to extending our full support to the Jaguar Land Rover team to realise their
competitive potential. Jaguar Land Rover will retain their distinctive identities and continue to
pursue their respective business plans as before. We recognise the significant improvement in the
performance of the two brands and look forward to this trend continuing in the coming years. It is
our intention to work closely to support the Jaguar Land Rover team in building the success and
preeminence of the two brands.”
Tata Motors confirmed that Mr. David Smith, the acting Chief Executive Officer of Jaguar Land
Rover, would be the new CEO of the business. Mr. Smith has 25 years of experience with Jaguar
Land Rover and Ford. Before recently returning to Jaguar Land Rover as its Chief Financial
Officer, he was Director Finance and Business Strategy for PAG and Ford of Europe.
Mr. Smith said, “We are very pleased with the association with Tata Motors. We look forward to a
sustained bright future for the company and its stakeholders.”
Jaguar Land Rover has been acquired at a cost of US$ 2.3 billion on a cash free, debt-free basis.
The purchase consideration includes the ownership by Jaguar and Land Rover or perpetual royalty-
free licences of all necessary Intellectual Property Rights, manufacturing plants, two advanced
design centres in the UK, and worldwide network of National Sales Companies.
Long term agreements have been entered into for supply of engines, stampings and other
components to Jaguar Land Rover. Other areas of transition support from Ford include IT,
accounting and access to test facilities. The two companies will continue to cooperate in areas such
as design and development through sharing of platforms and joint development of hybrid
technologies and powertrain engineering. The Ford Motor Credit Company will continue to
provide financing for Jaguar Land Rover dealers and customers for a transition period. Tata Motors
is in an advanced stage of negotiations with leading auto finance providers to support the Jaguar
Land Rover business in the UK, Europe and the US, and is expected to select financial services
partners shortly.
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2.2: MERGER OF TECH MAHINDRA &

MAHINDRA SATYAM:
ABOUT TECH MAHINDRA:

Tech Mahindra is a leading provider of solutions and services to the telecommunications industry
with a majority stake owned by Mahindra & Mahindra Limited, in partnership with British
Telecommunications Plc. Tech Mahindra serves telecom service providers, equipment
manufacturers, software vendors and systems integrators worldwide and their proven delivery
models, distinctive IT skills and decades of domain expertise enable clients to maximize returns on
their IT investment.
Tech Mahindra has principal offices in the UK, United States, Germany, UAE, Egypt, Singapore,
India, Thailand, Taiwan, Malaysia, Philippines, Canada and Australia. Tech Mahindra Ltd is part
of the US $14.4 billion Mahindra Group, a global industrial federation of companies and one of the
top 10 business houses based in India.
About Mahindra Satyam:

Mahindra Satyam is a leading global business and information technology services company that
leverages deep industry and functional expertise, leading technology practices, and an advanced,
global delivery model to help clients transform their highest-value business processes and improve
their business performance.
Mahindra Satyam is part of the $14.4 billion Mahindra Group, a global federation of companies
and one of the top 10 business houses based in India. Mahindra operates in the key industries that
drive economic growth, enjoying a leadership position in tractors, utility vehicles, information
technology, vacation ownership, rural and semi-urban financial services, etc. Mahindra has a
significant and growing presence amongst others, in the automotive industry, agribusiness,
aerospace, automotive components, consulting services, defense, energy, industrial equipment,
logistics, real estate, retail, steel and two wheelers.
Mahindra Satyam development and delivery centers in the US, Canada, Brazil, the UK, Hungary,
Egypt, UAE, India, China, Malaysia, Singapore, and Australia serve numerous clients, including
many Fortune 500 organizations.
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About the Merger:

Tech Mahindra acquired Satyam Computers through a government-mediated auction in
April 2009 after a multi-billion dollar scam by its founding Chairman B Ramalinga Raju
was unearthed.
The Board of Directors of Tech Mahindra and Mahindra Satyam had approved the
Scheme of Amalgamation at their respective Board Meetings held on 21st March 2012.
Appointed Date fixed for the Scheme: 1st April 2011
The Scheme was approved by the Bombay High Court on the grounds that,
• The Scheme would also be subject to the approval of the Andhra Pradesh
High Court.
• The Scheme appears to be fair and reasonable and is not violative of any
provisions of law and is not contrary to public policy.
• Also, none of the parties concerned had come forward to oppose the
Scheme before the Bombay High Court.
The decision was since pending for the receipt of approval from the Andhra Pradesh High
Court.
The Verdict:
Judge N.R.L. Nageswar Rao dismissed all petitions seeking to bar the merger on the grounds that
the scheme of amalgamation is in the interest of the public and the shareholders and the interest of
the workmen is also protected. He ordered that the scheme of amalgamation—a detailed merger
plan—be filed with the Registrar of Companies within 30 days.
The high court, while sanctioning the merger, said pending investigations and prosecution against
Ramalinga Raju and others will continue. Tech Mahindra should co-operate with investigating
agencies such as the Serious Fraud Investigation Office and Enforcement Directorate, it said. The
scheme of amalgamation of the two companies would be backdated to April 2011 as per the terms
of the merger
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Analysis of the Approval granted by Andhra Pradesh High Court:

For a Scheme of Arrangement sought under section 391 of the Companies Act, 1956 the Court
must see whether the provisions of the Act have been complied with, whether the majority is bona
fide and whether the scheme is a reasonable one. In this case, the Judge found the Scheme to be a
reasonable one and in the interest of the public.
Also, the Court should not refuse to sanction the Scheme merely because of a few objectors. In this
case, the Court dismissed the objections of the stakeholders as the role of the Court is just
supervisory and the Court cannot ignore the opinion of experts who have worked upon the Swap
Ratio and when the same has been accepted by majority shareholders. Valuation is a technical
method requiring expertise and there can be genuine differences of opinion about the correct Swap
Ratio. Unless the person who challenges the valuation satisfies the Court that the valuation is
unfair, the Court will not disturb the scheme of amalgamation.
The Court also ordered that all pending investigations against Ramalinga Raju will continue till
they are vacated or disposed of by relevant competent authority and Tech Mahindra should
cooperate with all the respective agencies which Tech Mahindra agreed to readily.
Conclusion:
For Tech Mahindra, the operational merger with its affiliate will help reduce its dependence on the
telecom sector, which now contributes 97% of its revenue, a share that will fall below 50% in the
combined entity.
For Satyam, the union may help finally put behind it the scandal that its founder B. Ramalinga
Raju caused when, in January 2009, he confessed to having misstated accounts to the tune of
Rs7,136 crore over a period of several years. His confession triggered a flight of employees and
client defections that resulted in the sale of the firm he founded in 1987 and built into India’s
fourth largest software services provider. This merger results in the dilution of the Satyam brand
name so whatever negative connotation that brand name had will be dissolved.
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2.3: MERGER OF VODAFONE & IDEA:
Introduction
On March 20, 2017, India’s third-largest telecommunications company, Idea Cellular (Idea),
announced US $ 23 billion, to merge with the world’s second-largest company, Vodafone India
Limited (Vodafone), to build India’s most lucrative company estimated at US $ 12.5 billion.
The company will have a subscription base of 394 million and a customer market share of 35% and
41% respectively. As the merger is expected to take 24 months to complete, both companies have
agreed to operate as separate companies until then. Together, Kumar Mangalam Birla, Chairman of
Aditya Birla Group said, “Idea and Vodafone will build a very important company when we look
at our mutual power.” The merger of fierce competitors in the Indian telecommunications industry
came after India’s largest company Reliance Industries Limited, owned by Mukesh Ambani,
launched Reliance Jio Infocomm Limited (Jio) in September 2016. Jio came up with prices,
offering free voice and the lowest prices in the world. It has disrupted the telecommunications
industry in the country where telecom operators receive 70% of their revenue through voice
telephony.
Valuation
Until the merger is completed, Vodafone and Idea will be operating separately and after merger
they may use both brand names for at least a few years until a full customer migration. The
transaction values Vodafone at Rs.82,800 crore (EV) and Idea for Rs.72,200 crore (EV) and debt
of Rs.55,200 and Rs.52,700 crores respectively. Opinions are far more limited than the current
market price and are also reflected in the declining price of Idea Cellular post announcement.
Vodafone’s high ratings are supported by high revenue, customer base and full spectrum capture
compared to Idea.
While Airtel is diverse with additional services and presence in South Asia and Africa it has a
market capitalization by Rs.1,36,570 / – crores and debts of Rs.96,078 / – crores.
Vodafone’s concept is equally balanced and note that the Aditya Birla team made a fixed amount
of dollars of Rs.109 per share to receive a share of 4.9% at the end of the merger (2018) from
Vodafone Group. Also, there is an option to get a stake of 9.5% for Rs.130 per share over a 4-year
period to bring about equality.
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Challenges
However, the markets did not respond well to the merger. After the announcement, Idea’s price
range began to decline. The share price dropped from Rs.97.70 on March 20, 2017 to Rs.81.80 on
September 06, 2017. Analysts were of the opinion that this would be similar to a three-legged race
with Usain Bolt. In other words, the feeling of competing with two leading brands (Airtel and Jio)
for two different brands could be a daunting task.
Market Movement
Since the announcement of the agreement on 20 March, 2017, the market price of Idea Cellular has
declined by approximately 10-15%. It seems that the shareholders of the Idea Cellular community
are not happy with the balance.
Conclusion
The merger between Idea and Vodafone will make them a top player. For the benefit of co-
operative management, synergies of up to INR 670 billion can be acquired & INR 140 billion on
operating costs for 4th year. It will also bring credit for the sale of Towers Assets to a consolidated
business.
The concept of consolidation seems to save costs and financial opportunities that aid financial
performance. And whether the company will be able to monetize the remaining spectrum must be
seen.
Aditya Birla Group’s promoters are smart enough to integrate with Vodafone in this price war and
at the same time they have the rights to measure the pole in stages. So far, there is no benefit for
public shareholders and they will hope to benefit from the long-term merger.
References
https://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/BSTR530.htm
https://mnacritique.mergersindia.com/idea-vodafone-telecom-merger/
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CHAPTER 3:
DATA FINDING &

ANALYSIS
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DATA FINDING AND ANALYSIS

1. How strong will the overall Indian M&A market be during the next
12 months?
STRONG NEUTRAL WEAK
4%
32%
64%
64 percent of survey respondents saw the future of the M&A market as strong or somewhat
positive. Advisors were slightly more confident than company respondents on the future of
the Indian M&A market. 38 percent of respondents had a neutral view of the market.
2. Which of the following is most responsible for fueling current Indian

M&A active?
In a continued trend, about 48 percent of respondents feel current M&A activity is being
fueled by private equity buyers. However, 26 percent of respondents said strategic buyers
have the most influence. Foreign buyer currently just at a 10% are playing an important role
in this matter, since they are in the race to establish themselves in the growing Indian markets
by merging with existing firms.
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3. What is your outlook for the Indian economy, generally, over the
next 12 months?
74 percent of respondents have a Positive outlook for the Indian economy in the next year,
considering that we are growing at a rate of 8 percent, making India stand amongst the fastest
growing economies in the world. India also has the youngest population and is the main
source for Human resources in an aging world. 20 percent have a Neutral outlook.
4. Which of the following buyers will INCREASE their presence the most
in the Indian M&A Market over the next 12 months (as a percentage
of total transactions)?
Survey results indicate that there is more emphasis on Foreign Buyers since inflow of FDI's is
increasing at a rapid rate. Thus fuelling the economic growth in the country.
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5. Which of the following types of buyers have been most responsible

for high company valuations over the past 12 months?
24 percent of respondents thought strategic buyers had the most influence driving up deal
valuations. Opinions regarding financial and foreign buyers were that 50 percent of
participants felt financial buyers were most responsible for high valuations and 10 percent of
participants felt foreign buyers had the most influence.
6. What sector will see the most M&A activity, globally, in the next 12
months?
20 percent of company respondents selected the automotive industry, 18 percent chose

technology, and 10 percent chose biotechnology and life sciences as the industry which will
see the most global activity in the coming year. 18 percent of respondents selected energy, 18
percent said technology, and 16 percent named the automotive industry.
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7. Where will the most foreign buyers in the Indian M&A market come
from in the next 12 months?
Respondents agreed that most foreign buyers in the Indian M&A market will come from
China. Survey analysts note that Chinese investors in the M&A market are generally more
visible shoppers because they tend to come to the market in groups. The second choice was
the United States of America (24 percent). After USA, respondents pointed to United
Kingdom (14 percent)
8. What is the single biggest challenge you encounter when dealing

with INBOUND cross-border mergers and acquisitions?
Those respondents who felt that the most foreign buyers in the Indian M&A market will
come from China are most concerned about doing effective due diligence (36 percent),
followed by labor issues (30 percent).
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9. In the next 12 months, do you believe your company will be involved

in an acquisition?
60 percent of all respondents who identified themselves as a company officer or executive

felt they would be involved in an acquisition in the coming year.
10. In the next 12 months, do you believe your company will be sold,
downsized, or involved in a spinoff?
58 percent of all respondents who identified themselves as a company officer or executive

felt their company will be involved in a sale, downsizing, or spinoff in the coming year.
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11. Do you feel the management and position of a company's employees

is compromised upon after an acquisition take place
The majority of the respondents(74 percent) believed that Post merger or acquisition ,their
place in the organization does get jeopardized. There could be many chances of either of the
two organizations employees not settling in with the other. This could lead to inefficient
functioning of the organization till the time a synergy is created.
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CHAPTER 4:
CONCLUSION
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lOMoARcPSD|25861709
CONCLUSION
One size doesn't fit all. Many companies find that the best way to get ahead is to expand ownership
boundaries through mergers and acquisitions. At least in theory, mergers provide economies of
scale by expanding operations and cutting costs. Investors can take comfort in the idea that a
merger will deliver enhanced market power.
Now a day, many companies are taking decision to go for merger and acquisitions to expand their
business. But, the procedure for merger is time consuming it almost takes 6 to 7 months. Therefore,
most of the mergers and acquisitions are not completed.
Mergers and acquisition transactions are often affected by government rules and regulations, most
of the countries do not allowed foreign companies to enter into local market alone. Such foreign
companies can enter only when they make merger with any local company.
The current trend shows that there is decline in the number of mergers and acquisitions.
It is because of mergers and acquisitions transactions the needs of expertise persons have
increased. Expertise persons include valuation expert, lawyers, accountants, etc.
Merger and acquisition will give positive result only when it is executed properly.
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CHAPTER 5:
BIBLIOGRAPHY
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BIBLIOGRAPHY
1. CMIE Reports
2. Economic Times
3. DNA money
4. Essentials of Business Environment - K. Ashwathapa
5. Business Environment - Kale Ahmed
WEBLIOGRAPHY
1. www.bseindia.com
2. www.yahoo.com (links and search data)
3. www.google.co.in (links and search data)
4. www.investopedia.com
5. http://en.wikipedia.org/wiki/Mergers_and_acquisitions"
6. www.chartadvisor.com (term of the day)
7. www.moneycontrol.com
8. www.lenovo.com
9. www.hindubusiness.com
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CHAPTER 6:
QUESTIONNAIRE
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QUESTIONNAIRE
Dear Sir / Madam,
Thank you for visiting us. By filling out this 5-10 minute survey, you will help us obtain the
very best results.
1. Gender:
(a) Male
(b) Female
2. Age group:
(a) < 20
(b) 21-30
(c) 31-40
(d) 41-50
(e) 51-60
(f) 60+
3. How strong will the overall Indian M&A market be during the next 12 months?
a) Strong b) Neutral c)Weak
4. Which of the following is most responsible for fueling current Indian M&A active?
a)Strategic Buyers b) Strong Economy
c) Private Equity Buyers d) Foreign Buyers
e)Robust Financial Markets f)Others
5. What is your outlook for the Indian economy, generally, over the next 12 months?
a) Positive b) Neutral
c) Negative
6. Which of the following buyers will INCREASE their presence the most in the Indian M&A Market
over the next 12 months (as a percentage of total transactions)?
a) Strategic Buyers b) Financial Buyers
c) Foreign Buyers
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lOMoARcPSD|25861709
7. Which of the following types of buyers have been most responsible for high company valuations
over the past 12 months?
a)Strategic Buyers b) Financial Buyers
c) Foreign Buyers d)None of the above
8. Where will the most foreign buyers in the Indian M&A market come from in the next 12
months?
a) Australia b) Brazil
c) China d) France
e) Germany f)USA
g)United Kingdom
9. What is the single biggest challenge you encounter when dealing with INBOUND cross-border
mergers and acquisitions?
a) Effective Due Diligence b) Unpredictable Legal Environment
c) Corrupt legal compliance d) Impact on Employees and labour issues
e) Impact on Stakeholders
10. In the next 12 months, do you believe your company will be involved in an acquisition?
a) Yes b) No
11. In the next 12 months, do you believe your company will be sold, downsized, or involved in a
spinoff?
a) Yes b)No c) Maybe
12. Do you feel the management and position of a company's employees is compromised upon after
an acquisition take place.
a) Yes b)No (c) May be
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Bachelors of Business Administration in Finance & Investment Analysis (University of

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TITLE OF THE PROJECT:

MONTH & YEAR OF SUBMISSION:

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Place: Kolkata Signature:

Name of the College: The bhawanipur education society college

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Place: Kolkata Signature:

College Roll Number: 123

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6. CHAPTER 2: STUDY OF MAJOR MERGER &

7. CHAPTER 3: DATA FINDING & ANALYSIS 31 - 37

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1.1: INTRODUCTION TO MERGERS & ACQUISITIONS

A takeover, or acquisition, on the other hand, is characterized as the purchase of a smaller

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1.2: OBJECTIVES BEHIND MERGERS

3. Diversification : Other reasons for mergers and acquisitions include diversification.

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8. Acquiring new technology: To stay competitive, companies need to stay on top of

9. Procurement of production facilities: Procurement of production facilities may be

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14. General gains:

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1. Face value of the share is increased.

3. Sale of shares from one company's shareholder to another is possible.

4. Shareholders get better investment opportunities in mergers and acquisitions.

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• From Promoters point of view: -

1. Mergers offer company's promoters advantages of increase in the size of their

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1.4: LIMITATIONS OF MERGERS &

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1.5: PROCEDURE OF MERGER

3. Scheme of merger - The scheme of merger should be prepared by the companies

• Particulars about the merging companies.

• Main terms of transfer of assets and liabilities from transferor to transferee.

• Conditions of conducting business.

• Particulars about share capital of merging companies specifying authorized

• Conditions about payment of dividend.

• Status of employees of the merging companies and also status of provident

• Treatment of debit balance of merging companies.

• Miscellaneous provisions covering income tax dues, contingencies and other

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5. Approval of scheme by financial institutions- The Board of Directors should in fact

9. Allotment of shares to shareholders of transferor company- By the virtue of

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1.6: MERGERS AND ACQUISITIONS

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1.7: PARTICIPANTS TO MERGERS

1. Investment bankers: Investment banking is one of the most important department in

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1.8: FACTORS RESPONSIBLE FOR SUCCESSFUL

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1.9: FACTORS RESPONSIBLE FOR

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